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Agere Amps Up NEC

Light Reading
LR Mobile News Analysis
Light Reading
1/26/2004

Agere Systems Inc. (NYSE: AGR.A) is talking up its attempts to challenge Motorola Inc.'s (NYSE: MOT) dominance in the radio frequency (RF) power amplifier transistor market, following its biggest deal announcement to date.

The Lucent Technologies Inc. (NYSE: LU) spinoff argues that today’s win with NEC Corp. (Nasdaq: NIPNY; Tokyo: 6701) marks the start of a long-awaited assault on Motorola’s crown (see Agere Inks NEC Deal). According to Allied Business Intelligence Inc. (ABI), Motorola has 50 percent market share for base-station power amp transistors, worth about $580 million annually.

Last year Agere unveiled a range of 21 chipsets targeted at base-station vendors, as well as dedicated power amp module manufacturers like Andrew Corp. (Nasdaq: ANDW). (See Agere Challenges Amp Champ and Agere Targets Base Stations.)

Its first win -- with Korean vendor Sewon Teletech -- was announced last week (see Agere Inks Sewon Deal).

Power amplifiers crank up voice and data signals in base stations, using power amp transistors that are about the size of a nickel. Agere claims it has managed to reduce the power requirements of its transistors by making them thinner, using a proprietary manufacturing technique. As a result, its transistors can apparently run 10 to 15 percent cooler than the competition, enabling vendors to produce smaller and more energy efficient base stations. [Ed. note: But do its amps go up to 11?]

Carlos Garcia, VP and General Manager, believes that the NEC and Sewon deals -- financial details of which remain undisclosed -- prove that the company is “building momentum in this space” in an effort to challenge Motorola. “We have only been in the market a year, so we see this as a certain milestone... It is a bit of a sleeping market that we are now waking up in a big way.”

“In the last ten years there have been four or five other companies hovering in the 10 percent market share range,” adds Garcia. “Motorola has 50 or 60 percent, and nobody has been able to crack it. We plan to do a lot better than that... The feedback we get is that we are the only supplier that has come out with a product that performs as good or better than the market leader.”

The bold claims don’t end there, either. A company spokesman adds that the company’s products are being evaluated “by more than 25 customers, including nine of the top 10 OEMs [original equipment manufacturers] and eight leading power amplifier manufacturers.”

Done deals are said to include three of the market’s “top five” Wideband Code Division Multiple Access (W-CDMA) OEMs, one “GSM/EDGE” vendor contract, another “top-five CDMA OEM” win and two “top-five power amplifier suppliers.”

— Justin Springham, Senior Editor, Europe, Unstrung

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